A new report from the World Bank has reiterated China’s status as a developing nation despite it being the biggest economy on the planet in PPP terms.
On 19 May the World Bank released the latest cycle of its International Comparison Program (ICP) – a statistical initiative that produces purchasing power parities (PPP’s) and comparable price level indexes (PLI’s) for participating economies.
According to the cycle China was the largest economy in the world with GDP of USD$19,617 billion in PPP terms in 2017. This compared to US GDP of $19,519 billion, and Indian GDP of $8,051 billion.
China’s GDP in PPP terms currently exceeds that of Japan, Germany, the UK, France and Italy combined, accounting for a 16.4% share of global GDP.
The combined GDP of China and the US currently accounts for one third of global GDP.
Despite its prodigious size, China was still classified as an “upper-middle-income economy” by the ICP, alongside the Russian Federation, Brazil, Mexico, Turkey and Iran.
India, Indonesia and Egypt were all classified as lower-middle-income economies.
China’s status as a developing economy has become a bone of contention in ongoing trade disputes with the US, which have become even more inflamed by the COVID-19 pandemic.
In July 2019 US President Donald Trump fired a Twitter salvo at China, accusing “wealthy countries” of “cheating the system at the expense of the USA” by claiming to be developing countries in order to flout World Trade Organisation (WTO) rules.
Trump subsequently called for the US Trade Representative to “use all available means to secure changes” with the WTO.